Chris Flynn: Fueling a food crisis

Chris Flynn

Friday

Aug 29, 2008 at 12:01 AMAug 29, 2008 at 5:13 PM

Ethanol policies have been a boon for corn-farmers and communities in places like Iowa and Nebraska. Surely nobody begrudges them their success. But there must be better ways to support farmers than by raising food prices for working families.

Being in the food industry can be uniquely satisfying – it is a pleasure to be in the business of feeding people.

But it’s also a tough business, with tight margins and heavy competitions. From the largest chain supermarkets to the local corner store, every day is a challenge, but it is one that we accept. Yet when government policies are put in place that hurt our businesses, the people we employ and our customers, we have to speak out. And that is exactly what is happening with government policies that require turning our nation’s corn into ethanol.

The idea behind ethanol policies was appealing: we could use a homegrown crop to break our addiction to oil. Congress put in place a subsidy for blending ethanol into the fuel supply, a tariff was applied to foreign ethanol and a mandate was established requiring that set amounts of ethanol be utilized each year. These sweeping policies make ethanol one of the most generously supported industries in America.

The impacts of these policies, however, have been significant. This year, about one-third of all U.S. corn will be used for ethanol. As a result, corn prices have surged, setting new records over the past few months. Record corn prices have led farmers to plant less of other grains, making everything from wheat to soy more expensive. Further, with corn prices up, the cost of feed for livestock and poultry producers have spiked, leading to higher prices for dairy, chicken, eggs, beef and pork.

All across our state and around the nation, grocers are seeing the cost of everything they buy go up. In the face of rising input costs, grocers are facing agonizing choices. They can raise prices for consumers – but in hard economic times, that can mean a huge drop in business. They can cut into their own profits – but since margins are already so thin, there isn’t much room for cutting. Or, they can reduce other costs, including labor.

The many grocers I talk to tell me they are being forced to do all three. That is bad news – not just for them but for everyone. We don’t often think of grocery chains and corner stores as being important parts of our economy, but they are. They provide good, dependable jobs for tens of thousands of workers in our state – men and women who count on those jobs to provide for their families; folks who can’t easily transition to other industries.

When those jobs get eliminated because of rising food prices, our workers often find they have nowhere to turn. Some may wind up on the welfare rolls. Others will look for work in other sectors, driving down wages in those areas. Ultimately, the ripple effect touches us all.

This would be troubling if it was all just a case of the market running its course. But the fact that this is being largely driven by a policy our own government put in place is nothing short of infuriating. It’s true that ethanol policies have been a boon for corn-farmers and communities in places like Iowa and Nebraska. Surely nobody begrudges them their success. But there must be better ways to support farmers than by raising food prices for working families.

It is time for Congress to restore some fairness and some balance to our policies. Food prices are set to rise about 8 percent this year. Economist Bill Lapp has produced a study predicting food prices will continue to rise by about 9 percent each year through 2012 without a change in policy. Just recently, the USDA warned that we have only just begun to see the impact of higher meat prices.

These figures must serve as a wake-up call. In this election year, politicians should listen to the pain that rising food prices are inflicting on families around the nation. If they do then they cannot help but recognize the need for change. And hopefully, when they go back to Washington in January, they will be resolved to address this growing crisis.

Chris Flynn is president of the Massachusetts Food Association. He lives in Sherborn.

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